[Federal Register Volume 67, Number 100 (Thursday, May 23, 2002)]
[Notices]
[Pages 36271-36273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-12980]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25577; 812-12190]


SA Funds--Investment Trust and Assante Asset Management Inc.; 
Notice of Application

May 17, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from section 15(a) 
of the Act and rule 18f-2 under the Act.

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    Summary of the Application: Applicants, SA Funds--Investment Trust 
(the ``Trust'') and Assante Asset Management Inc. (``Adviser''), 
request an order to permit them to enter into and materially amend 
subadvisory agreements without shareholder approval.
    Filing Dates: The application was filed on July 24, 2000 and 
amended on May 7, 2002.
    Hearing or Notification of Hearing: An order granting the 
application will be

[[Page 36272]]

issued unless the Commission orders a hearing. Interested persons may 
request a hearing by writing to the Commission's Secretary and serving 
applicants with a copy of the request, personally or by mail. Hearing 
requests should be received by the Commission by 5:30 p.m. on June 11, 
2002, and should be accompanied by proof of service on applicants in 
the form of an affidavit or, for lawyers, a certificate of service. 
Hearing requests should state the nature of the writer's interest, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW., Washington, DC 
20549-0609. Applicants, c/o Stephanie M. Nichols, Esq., State Street 
Corporation, One Federal Street, 9th Floor, Boston, Massachusetts 
02110.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Sr., Senior Counsel, 
at (202) 942-0714, or Nadya B. Roytblat, Assistant Director, at (202) 
942-0564 (Division of Investment Management, Office of Investment 
Company Regulation).

SUPPLEMENTARTY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the Commission's Public Reference Branch, 450 Fifth Street, NW., 
Washington, DC 20549-0102 (telephone (202) 942-8090).

Applicants' Representations

    1. The Trust, a Delaware business trust, is registered under the 
Act as an open-end management investment company. The Trust is 
currently comprised of eight series, each with its own investment 
objectives, policies and restrictions (each a ``Fund'' and 
collectively, the ``Funds''). The Adviser, an indirect wholly-owned 
subsidiary of Assante Corporation, is registered under the Investment 
Advisers Act of 1940 (``Advisers Act'') and serves as the investment 
adviser to each of the Funds.\1\
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    \1\ Applicants also request relief with respect to any future 
Funds, and any other registered open-end management investment 
company and its series that in the future (a) are advised by the 
Adviser or a person controlling, controlled by, or under common 
control with the Adviser, (b) operates in substantially the same 
manner as the Funds with regard to the Adviser's responsibility to 
select, evaluate and supervise Subadvisers, as defined below, and 
(c) complies with the terms and conditions in this application 
(``Future Funds,'' and together with the Funds, the ``Funds''). The 
only existing investment company that currently intends to rely on 
the requested order is named as an applicant. No Fund will contain 
in its name the name of any Subadviser, as defined below.
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    2. The Trust, on behalf of each Fund, and the Adviser have entered 
into an investment advisory and administrative services agreement 
(``Advisory Agreement'') that was approved by the board of trustees of 
the Trust (the ``Board''), including a majority of the trustees who are 
not ``interested persons,'' as defined in section 2(a)(19) of the Act 
(``Independent Trustees'') and the initial shareholder of each Fund. 
Under the terms of the Advisory Agreement, the Adviser, subject to 
Board oversight, has overall supervisory responsibility for the 
investment program for each Fund. The Adviser and each Fund have 
entered into separate investment subadvisory agreements (``Subadvisory 
Agreements'') with one or more subadvisers (``Subadvisers'') pursuant 
to which the Subadviser makes the specific investment decisions for the 
Fund. Each Subadviser is registered or exempt from registration under 
the Advisers Act.
    3. Pursuant to the Advisory Agreement, the Adviser continuously 
evaluates the performance of each Subadviser, recommends to the Board 
the appointment of new Subadvisers as circumstances warrant, and 
negotiates and renegotiates the terms of the Subadvisory Agreements, 
including the subadvisory fees, with the Subadvisers. The Adviser 
selects Subadvisers based on the Adviser's continuing evaluation of 
their skills in managing assets pursuant to particular investment 
styles. The Adviser also recommends to the Board the termination of 
Subadvisers. Each Fund pays the Adviser a fee payable monthly at an 
annual rate based on the Fund's average daily net assets. The Trust 
also pays to the Adviser the subadvisory fees of the Subadvisers at a 
rate that has been negotiated between the Adviser and Subadvisers, 
subject to approval by the Board. The Adviser then pays the Subadvisers 
the subadvisory fees.
    4. Applicants request an order to permit the Adviser, subject to 
the oversight of the Board, to enter into and materially amend 
Subadvisory Agreements without shareholder approval. Applicants state 
that shareholder approval of a Subadvisory Agreement with a Subadviser 
that would be an ``affiliated person,'' as defined in section 2(a)(3) 
of the Act, of the Trust or the Adviser (other than by reason of 
serving as a Subadviser to one or more of the Funds (an ``Affiliated 
Subadviser'') will be obtained. None of the current Subadvisers is an 
Affiliated Subadviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of the company's outstanding voting securities. 
Rule 18f-2 under the Act provides that each series or class of stock in 
a series company affected by a matter must approve such matter if the 
Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provision of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants request an exemption under section 6(c) of the Act from 
section 15(a) of the Act and rule 18f-2 under the Act to permit them to 
enter into and materially amend Subadvisory Agreements without 
shareholder approval.
    3. Applicants assert that the shareholders are relying on the 
Adviser and the Board to select Subadvisers to manage the Fund's 
portfolio. Applicants assert that, from the perspective of the 
investor, the role of the Subadvisers with respect to the Funds is 
comparable to that of individual portfolio managers employed by 
traditional investment advisory firms. Applicants believe that 
permitting the Adviser to perform those duties for which the 
shareholders of the Funds are paying the Adviser--the selection, 
supervision and evaluation of Subadvisers--without incurring 
unnecessary delay or expense is appropriate in the interests of the 
Funds' shareholders and will allow each Fund to operate more 
efficiently. Applicants note that the Advisory Agreement will remain 
subject to section 15(a) of the Act and rule 18f-2 under the Act, 
including the requirements for shareholder approval. Applicants also 
note that shareholders of a Fund will approve any change to a 
Subadvisory Agreement if such change would result in an increase in the 
overall management and advisory fees payable by the Fund that have been 
approved by the shareholders of the Fund.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:

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    1. Before a Fund may rely on the order requested in this 
application, the operation of the Fund in the manner described in this 
application will be approved by a majority of the Fund's outstanding 
voting securities, as defined in the Act, or by its initial 
shareholder, provided that, in the case of approval by the initial 
shareholder, the pertinent Fund's shareholders purchase shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition 2 below.
    2. Each Fund relying on the requested relief will disclose in its 
prospectus the existence, substance and effect of any order granted 
pursuant to the application. In addition, each Fund will hold itself 
out to the public as employing the management structure described in 
the application. The prospectus will prominently disclose that the 
Adviser has the ultimate responsibility (subject to oversight by the 
Board) to oversee the Subadvisers and recommend their hiring, 
termination, and replacement.
    3. At all times, a majority of the Board will be Independent 
Trustees, and the nomination of new or additional Independent Trustees 
will be at the discretion of the then-existing Independent Trustees.
    4. The Adviser will not enter into a Subadvisory Agreement with any 
Affiliated Subadviser without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. When a Subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
Trust's Board minutes, that the change is in the best interests of the 
Fund and its shareholders and does not involve a conflict of interest 
from which the Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    6. Within 90 days of the hiring of any new Subadviser, the Fund 
shareholders will be furnished all information about a new Subadviser 
that would be contained in a proxy statement, including any change in 
such disclosure caused by the addition of a new Subadviser. Each Fund 
will meet this condition by providing shareholders with an information 
statement meeting the disclosure requirements of Regulation 14C, 
Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange 
Act of 1934 within 90 days of the hiring of a Subadviser.
    7. The Adviser will provide management services to each Fund, 
including overall supervisory responsibility for the general management 
and investment of each Fund's portfolio, and, subject to review and 
approval by the Board, will: (a) Set each Fund's overall investment 
strategies; (b) select Subadvisers; (c) monitor and evaluate the 
performance of Subadvisers; (d) ensure that Subadvisers comply with 
each Fund's investment objectives, policies, and restrictions by, among 
other things, implementing procedures reasonably designed to ensure 
compliance; and (e) allocate and, where appropriate, reallocate a 
Fund's assets among its Subadvisers when a Fund has more than one 
Subadviser.
    8. No trustee or officer of the Trust, or director or officer of 
the Adviser will own directly or indirectly (other than through a 
pooled investment vehicle that is not controlled by such person) any 
interest in a Subadviser except for: (a) Ownership of interests in the 
Adviser or any entity that controls, is controlled by, or is under 
common control with the Adviser; or (b) ownership of less than 1% of 
the outstanding securities of any class of equity or debt of a 
publicly-traded company that is either a Subadviser or an entity that 
controls, is controlled by, or is under common control with a 
Subadviser.
    9. Any change to a Subadvisory Agreement that would result in an 
increase in the overall management and advisory fees payable by the 
Fund will be approved by the shareholders of the Fund.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-12980 Filed 5-22-02; 8:45 am]
BILLING CODE 8010-01-P